DoD's $458M contract with MITRE for engineering services shows a lack of competition and raises value concerns

Contract Overview

Contract Amount: $458,265,556 ($458.3M)

Contractor: THE Mitre Corporation

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2011-09-30

Contract Duration: 729 days

Daily Burn Rate: $628.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: FUNDING FOR SECOND YEAR OPTION PERIOD FOR SYSTEMS ENGINEERING SERVICES - MITRE

Place of Performance

Location: MC LEAN, FAIRFAX County, VIRGINIA, 22102, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $458.3 million to THE MITRE CORPORATION for work described as: FUNDING FOR SECOND YEAR OPTION PERIOD FOR SYSTEMS ENGINEERING SERVICES - MITRE Key points: 1. The contract's value is substantial, representing a significant investment in systems engineering. 2. A sole-source award suggests limited market exploration and potential for higher costs. 3. The duration of the contract (729 days) indicates a long-term need for these services. 4. The absence of small business set-asides warrants further investigation into subcontracting opportunities. 5. The contract type (Cost No Fee) can lead to cost overruns if not managed tightly. 6. Performance context is limited without specific deliverables or performance metrics.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific, often unique, systems engineering services provided by MITRE. Without competitive bids, it's difficult to ascertain if the $458 million represents a fair market price. The 'Cost No Fee' contract type, while common for certain types of research and development or advisory services, can present risks of cost escalation if not rigorously overseen. Comparing this to similar large-scale, sole-source engineering contracts would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Defense did not solicit bids from multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when circumstances preclude full and open competition. The lack of competition means there was no direct price discovery through a bidding process, potentially leading to less favorable pricing for the government compared to a competed contract.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down costs. The government also misses out on the innovation and efficiency that can arise from a competitive marketplace.

Public Impact

The Department of Defense benefits from specialized systems engineering expertise for critical defense systems. Services delivered likely support the development, integration, and sustainment of complex military technologies. The geographic impact is primarily within the Department of Defense's operational and research facilities, with a concentration in Virginia. Workforce implications include the employment of highly skilled engineers and technical professionals at MITRE.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus contract type carries inherent risk of cost overruns without stringent oversight.
Lack of transparency in the justification for sole-source award.
Absence of small business participation requirements could limit broader economic impact.

Positive Signals

MITRE is a federally funded research and development center (FFRDC) with a long history of supporting government engineering needs.
The contract addresses critical systems engineering requirements for national security.
Long-term engagement suggests a stable and reliable source of expertise for the DoD.

Sector Analysis

The engineering services sector is a critical component of the federal procurement landscape, supporting a wide array of government functions from defense to infrastructure. This contract falls within the broader engineering services category (NAICS 541330), which encompasses firms providing specialized engineering expertise. The federal government is a major consumer of these services, particularly within the Department of Defense, which relies on advanced engineering for its complex technological systems. Benchmarks for similar large-scale, sole-source engineering contracts are difficult to establish due to the bespoke nature of many such agreements.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mandated. As a sole-source award to a large organization like MITRE, the direct opportunities for small businesses are likely limited unless MITRE proactively engages them as subcontractors. This could represent a missed opportunity to foster small business participation in critical defense engineering projects and to leverage the agility and innovation that small businesses often bring.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army, within the Department of Defense. As a 'Cost No Fee' contract, rigorous financial oversight and performance monitoring are crucial to ensure that costs are reasonable and allocable to the contract's objectives. Transparency is assessed as fair, given it's a sole-source award to an FFRDC, but detailed justifications and performance reports would be key. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Systems Engineering Support Contracts
Federally Funded Research and Development Center (FFRDC) Contracts
Engineering and Technical Services for Military Systems
Department of the Army Research and Development Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Cost No Fee contract type increases government cost risk.
Lack of transparency regarding specific performance metrics.
Potential missed opportunities for small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $458.3 million to THE MITRE CORPORATION. FUNDING FOR SECOND YEAR OPTION PERIOD FOR SYSTEMS ENGINEERING SERVICES - MITRE

Who is the contractor on this award?

The obligated recipient is THE MITRE CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $458.3 million.

What is the period of performance?

Start: 2009-10-01. End: 2011-09-30.

What is MITRE's track record with the Department of Defense, particularly on similar systems engineering contracts?

MITRE Corporation, as a Federally Funded Research and Development Center (FFRDC), has a long-standing and extensive track record of supporting the Department of Defense (DoD) and other government agencies across a wide spectrum of complex technical challenges. Their role often involves objective analysis, research, development, and systems engineering for critical national security programs. Historically, MITRE has been instrumental in areas like command and control, cybersecurity, aerospace, and intelligence systems. For systems engineering specifically, their expertise is highly regarded, often focusing on integration, architecture, and lifecycle support for large, complex defense platforms. While specific contract performance data for this $458 million option period is not detailed here, MITRE's overall reputation within the DoD is that of a trusted, non-advocate advisor and technical partner, frequently engaged for high-stakes, technically demanding projects where independent expertise is paramount.

How does the $458 million funding for this second-year option period compare to previous years or similar contracts?

The provided data indicates $458,265,556.36 as the funding for the second year option period. Without historical data for the initial period or subsequent options, a direct year-over-year comparison is not possible. However, this figure represents a substantial investment for a single year of systems engineering services. To contextualize this, one would need to examine the total contract value across all years, including the base period and all exercised options. Comparing this annual funding to other large-scale, sole-source systems engineering contracts awarded by the DoD or other agencies to similar FFRDCs or specialized engineering firms would provide a benchmark for its relative size and scope. The 'Cost No Fee' (CNF) contract type also implies that the government bears the cost of performance, making the total expenditure a key metric for value assessment.

What are the primary risks associated with a sole-source, Cost No Fee contract of this magnitude?

A sole-source, Cost No Fee (CNF) contract of this magnitude ($458 million) presents several significant risks. Firstly, the sole-source nature eliminates competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to optimize costs. The government lacks the benefit of comparing proposals and negotiating from a position of strength derived from multiple bids. Secondly, the CNF structure means the government pays the contractor's allowable costs plus a fixed fee, but the fee is earned regardless of whether the project meets cost targets. This shifts much of the cost risk to the government. If cost controls are weak or the scope of work expands without proper management, cost overruns are a substantial risk. Effective oversight, rigorous auditing of costs, and clear performance metrics are critical to mitigate these risks, but the inherent structure still favors the contractor in terms of cost certainty.

What specific systems engineering services are being provided under this contract, and how is their effectiveness measured?

The provided data identifies the contract as being for 'Systems Engineering Services' but does not detail the specific tasks or deliverables. Typically, systems engineering encompasses a broad range of activities, including requirements definition, system architecture design, integration, verification, validation, lifecycle support, and technical management. For a contract of this scale with MITRE, services likely involve highly complex, mission-critical defense systems. Effectiveness measurement would ideally be tied to specific performance metrics (e.g., meeting technical specifications, successful integration milestones, system reliability targets, adherence to schedules). However, without access to the contract's Statement of Work (SOW) and any associated Performance Work Statements (PWS) or contract Data Requirements Lists (CDRLs), assessing how effectiveness is measured is not possible from the given information. The 'Cost No Fee' structure suggests a focus on achieving defined objectives rather than strict cost adherence.

What is the historical spending pattern for systems engineering services by the Department of the Army, and how does this contract fit?

The Department of the Army, like other branches of the DoD, consistently spends significant amounts on systems engineering services due to the complexity of its platforms and systems, ranging from ground vehicles and aircraft to communication networks and IT infrastructure. Historical spending patterns reveal a substantial and often increasing reliance on specialized engineering support, both from internal resources and external contractors. This $458 million contract for MITRE represents a major component of that spending for the specified period. Its fit within the broader pattern is as a high-value, sole-source engagement with a key FFRDC, likely addressing foundational or highly specialized engineering needs that are deemed beyond the scope of typical competitive procurements. Understanding the Army's total systems engineering budget and the proportion allocated to FFRDCs versus other contractors would provide further context.

Are there any specific justifications or requirements that led to this contract being sole-sourced rather than competed?

The data indicates this contract was 'NOT COMPETED,' signifying a sole-source award. Federal procurement regulations generally require full and open competition unless specific exceptions apply. Common justifications for sole-sourcing include: unique capabilities possessed by only one source (often the case with FFRDCs like MITRE for specific research or advisory roles), urgent and compelling needs where competition is impractical, or when the contract is for a follow-on effort to a previously competed contract where only one source can provide the necessary compatibility or standardization. For MITRE, their FFRDC status often serves as a primary justification, allowing them to provide objective, specialized technical support to the government without the conflicts of interest inherent in for-profit R&D. The specific justification would be detailed in a Justification and Approval (J&A) document filed with the contract.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 7515 COLSHIRE DR, MC LEAN, VA, 22102

Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $458,265,556

Exercised Options: $458,265,556

Current Obligation: $458,265,556

Contract Characteristics

Cost or Pricing Data: YES

Timeline